Charleston restaurants violate labor laws

Restaurant workers across the Charleston area are routinely losing out on their wages by illegal management tactics that include forcing cooks to work off the clock, doctoring official time cards, withholding overtime pay and skimming servers' tips, according to government documents and worker reports.

Wage complaints

If you believe your employer is violating any provisions of the Fair Labor Standards Act, you can call (866) 487-9243.

"We encourage employees to call us," says Jamie Benefiel, a Columbia district director for the U.S. Department of Labor.

All calls are free and confidential, regardless of the caller's citizenship status.

Under federal law, employers are not allowed to retaliate against workers for filing a complaint with the Wage and Hour Division.

Additionally, if the Department of Labor pursues an investigation, it will not reveal to the employer whether the investigation was sparked by an employee complaint.

Since 2004, 34 Charleston area restaurants have been cited for violating protective labor laws that have been in place for 74 years. Illegal practices, whether adopted out of ignorance or an attempt to sidestep the city's kitchen staffing crisis and to plump profit margins, have been documented by the U.S. Department of Labor at restaurants ranging from sports bars to the city's finest dining rooms.

Restaurants in Charleston annually collect nearly half a billion dollars in revenue. But the wealth isn't always reaching the people who make as little as $7.25 an hour and serve the food for which the city has become internationally famous. Cumulatively, the 34 restaurants cited over the past decade shorted their staffers $388,067.

Wage inequities are pervasive in the nation's restaurant industry, compounding the financial hardships posed by low pay and scant benefits. According to a recent study by the Economic Policy Institute, 43 percent of restaurant workers live below the threshold to make ends meet. Yet the problem has received little attention in South Carolina due to state laws and lax federal enforcement.

The U.S. Department of Labor has lately stepped up its oversight, auditing restaurants more accustomed to being scrutinized by food critics than government agents. "There are people out there who are going to get in trouble because there are people doing funny stuff," predicts Jeremiah Bacon, chef of The Macintosh, a perennial James Beard Award semifinalist and one of the first high-profile restaurants investigated.

The crackdown isn't sitting well with some local restaurateurs, who say some labor laws are at odds with chef development.

"If an individual voluntarily elects to come into work early or stay late to learn and observe, this can contradict labor laws, because the moment they stop observing and participate, it requires compensation," says David Howard, president of the Neighborhood Dining Group, the parent company of Husk and McCrady's. The restaurants made nationally prominent by chef Sean Brock were audited last year, but because the case remains open, the Department of Labor hasn't yet released details concerning violations.

"I believe it is a mistake to stifle the desire and craving for education," Howard says.

Restaurant industry epidemic

Hailed by President Franklin D. Roosevelt as the most important piece of New Deal legislation since the Social Security Act, the 1938 Fair Labor Standards Act establishes minimum wage, overtime, recordkeeping and child labor standards in the private sector. While the FLSA doesn't limit how many hours an employee can work in a week, it requires all hours beyond 40 to be compensated at a rate of not less than one-and-a-half times the regular rate of pay. Additionally, tipped employees who work overtime are supposed to earn 150 percent of minimum wage, even if their regular pay rate is $2.13 an hour.

"We find a lot of violations in the restaurant industry," says Jamie Benefiel, district director for the U.S. Department of Labor, Wage & Hour's district office in Columbia. Benefiel estimates 80 percent of restaurants investigated by her office break laws governing employee compensation. "Typically, they don't calculate overtime or pay overtime at all."

The problem of people not getting paid for their work has become prevalent in the food-and-beverage sphere. According to a 2005 study by the Restaurant Opportunities Center of New York, an advocacy organization for restaurant workers, 59 percent of restaurant workers have worked overtime without proper compensation.

Unpaid help wanted

The practice of denying pay to workers is so ingrained in the Charleston restaurant scene that food-and-beverage professionals across the city whisper about a "black list" of employees who've complained about the arrangement. Yet labor issues are largely invisible to restaurant patrons.

For example, a recent dinner menu at The Macintosh included grouper head terrine, seared vermillion snapper with cucumber dashi, and Manchester Farm quail in black garlic barbecue sauce, trendy items designed to telegraph the restaurant's commitment to doing right by the environment, local purveyors and animals bound for slaughter.

The restaurant is equally proud of how it treats its workers. Indigo Road Restaurant Group managing partner Steve Palmer annually conducts an employee satisfaction survey and organizes social activities for its staff. But nothing on the menu indicates that, because worker treatment hasn't emerged as a diner concern.

Yet at The Macintosh, prior to a 2012 investigation, cooks were routinely paid for fewer hours than they worked and denied overtime pay, according to a Department of Labor report. The then-year old restaurant was required to pay $15,198 in back wages.

A concurrent investigation of O-Ku, another Indigo Road property, turned up 61 more violations of the FLSA, all of them related to recordkeeping, overtime and minimum wage.

Palmer and Bacon own up to all of the violations, which they say stemmed from failing to question the legality of entrenched restaurant practices, such as paying by the shift instead of the hour. Since the case was concluded, Indigo Road has hired a human resources attorney to ensure its continued compliance with the law.

Despite having decades of experience in the restaurant industry, Palmer and Bacon say it never occurred to them they needed a professional to monitor their payroll, just as they outsource tax preparation and consult with the S.C. Department of Health and Environmental Control when installing new equipment.

"It was all stuff we were not aware was wrong," says Palmer, who 25 years ago compiled training manuals during unpaid hours as a server trainee. "I'm not saying ignorance was an excuse, but there was no malice. Our employees are the most important thing in the world."

Palmer recalls being "scared to death" when auditors contacted him. "I was petrified," he says. "I thought we were going to lose the business."

The process was equally traumatic for staffers, a few of whom tried to return the Department of Labor-ordered checks, Palmer says.

"Am I embarrassed? Of course I am," he says. "But of the cooks that were on shift pay, there's not one of them who felt he was being abused. Could there be a restaurant where it's implied (that cooks have to work off the clock)? There might be. It's a macho thing in the kitchen. But that's not the way I was taught to run a business."

Following the investigation, The Macintosh added an extra prep cook in the morning and briefly scaled back its menu to account for staffing changes necessitated by payroll adjustments. Bacon also started turning down requests from cooks to spend their off-hours in Indigo Road restaurant kitchens.

"We had someone who wanted to come in and make sausage at Indaco," Bacon says. "Five years ago, yeah. Now, no. You're in the house, you're clocked in."

Taking the stage

The pervasiveness of lost wages in the restaurant industry can be partly attributed to a culture that prizes unpaid work. It's common for chefs to acquire experience by "staging" or interning for free Technically, it's often an illegal arrangement: Unless an internship is structured according to a specific set of criteria, the employer can't derive immediate advantage from the intern's activities, for example, compensation is required.

Even established chefs will sometimes stage as a way of enhancing their skills. Chef Katie Button of Asheville's Curate, who got her start rolling milk skins and washing pots at El Bulli, a Michelin three-star restaurant in Spain, strives to stick to a once-a-year stage schedule.

"For me, it's been an extremely important part of my career and ability to grow," Button says. "It's a learning experience."

Button is such a champion of the stage system that she urges culinary students who want to intern at Curate to consider working without pay if circumstances allow it. "As an unpaid intern, you're going to learn so much, whereas if I'm paying you, you're going to be working the fry station," she says.

Unpaid interns rotate between stations, and while Button says she never asks them to spend a shift washing dishes or taking out the trash, their educational tasks are frequently repetitive.

Once the vegetables are peeled and knives put away, "You aren't going to know what to do," cookbook author Michael Natkin, who staged at New York City's Dirt Candy and Seattle's Canlis, writes in an open letter to prospective stages. "Don't even think about leaving. You stay, without asking when you'll be done, until your station lead sends you home."

Paid cooks in high-end restaurants are generally expected to abide by the same code. "To be totally honest, I have done it in the past, and never had a problem with it," Button says of working off the clock. "I was very happy to come in and then clock in later. I was paid well, and I felt like my 40-hour-a-week pay was my salary."

Button says she was never told by an employer to work off the clock; colleagues who chose to work only for the duration of their shifts didn't suffer any repercussions. But she noticed that they didn't move up to the next station as quickly, either. She likens working off the clock to "staging on the job," and compares the phenomenon to pulling long, unpaid hours at a law firm while studying for a law degree.

Yet what makes the practice especially egregious in Charleston, according to a former FIG cook, is the rite of passage doesn't seem to lead anywhere.

"In New York City, as soon as you hit sous (chef), you're making $70,000, and it skyrockets from there," the cook says. "A sous chef here makes $35,000. I've never seen a pay scale so not in tune with the cost of living. Here, you just struggle."

Stepping up enforcement

Restaurant workers in states such as California also benefit from more stringent state labor laws, which are enforced by the state's Department of Labor.

"In South Carolina, we're the only enforcement agency," says district director Benefiel. "We've had very little enforcement in South Carolina for a long time."

Five years ago, the U.S. Department of Labor "went to trying to be more strategic," instead of playing catch-up, Benefiel says, a shift that has produced a surge in South Carolina investigations. Under the administration-led effort, a department spokesman says, "We focus our largest efforts where workers are hit hardest by not being paid what our laws require, and where those workers are least likely to exercise the rights provided by those laws."

Year-to-date, the Columbia district office, which maintains a Charleston field office staffed by three investigators, has received 90 complaints and conducted full investigations of about 80 of them. Benefiel says employers are still getting used to the Department of Labor's increased visibility in the Lowcountry.

"They're usually surprised to see us," she says.

The office doesn't limit its investigations to the subjects of employee complaints, partly because workers are frequently reluctant to bring violations to the attention of authorities.

Afraid to complain

Charleston attorney Bruce Miller, a certified specialist in employment and labor law, is handling a lawsuit against Hyman's Seafood Company for a number of alleged FLSA violations, including paying its employees less than minimum wage, administering an illegal tip pool and knowingly allowing its servers to work off the clock.

"We do know that there is no evidence that any Hyman's employee ever received less than minimum wage for hours worked," says the restaurant's attorney, Alice Paylor, who issued a statement saying Hyman's planned to respond to the other charges in court.

Since the case was first publicized, employees of other restaurants have contacted Miller about similar situations. He anticipates soon filing additional lawsuits against six other restaurants in Charleston, Murrells Inlet and Myrtle Beach. Earlier this month he brought suit against Kickin' Chicken, alleging that the restaurant failed to pay overtime wages and forced its servers to share their tips with the kitchen staff. Kickin' Chicken's attorney did not return a call seeking comment.

But not every employee who's met with Miller has chosen to pursue legal action.

"I had a server here in my office, and she decided she didn't want to go forward," says Miller. "She says it's a restaurant with a loyal group of staff. They were willing to look the other way."

Employees are equally unlikely to complain to their bosses. "When (Hyman's employees) complained, they were told 'find another job,'" says Miller, who speculates that many young restaurant workers may not be aware of their rights. "Jobs are not easy to find."

'Ton of pressure'

"We basically complained to each other and not to management," recalls a former Husk cook who was on the restaurant's opening team in 2010. "There wasn't really a choice. We were working at the most famous new restaurant in the country, and there was a ton of pressure on us."

Howard of Neighborhood Dining Group says the only violations uncovered by the Department of Labor's investigation concern charges for uniforms and "the classification of a few cooks that had been promoted and how this relates to overtime pay."

Howard wrote in a statement to The Post and Courier that the restaurant group has "worked diligently to identify and rectify any labor and wage issues within our company and will continue to do so ... no employees have ever been required or asked to work for free."

He adds, "These errors were ours and they were corrected immediately."

At some downtown restaurants where workers clocked all of their hours, managers later adjusted time cards to show fewer hours worked. The Department of Labor documented the practice at Toast, which last year was ordered to pay $27,614 in connection with 155 violations. To give employees more shifts and still comply with a company policy of not paying overtime, the case report reveals, a general manager would edit hours whenever they exceeded 40 a week.

"They're only fooling themselves," Benefiel says of employers who tinker with computerized records, which leave a digital footprint.

At Hyman's, by contrast, employees didn't have the option of clocking in when they arrived. "The time clock would not function when they first came in," Miller says. "That's totally illegal."

Beyond the kitchen

While discouraging employees from clocking in, shaving hours off timecards and paying the standard hourly wage for overtime hours are by far the most prevalent methods of skirting labor laws in the back of the house, local restaurants have found an array of other ways to illegally dock the pay of servers and bartenders.

Triangle Char & Bar hired a company to tally up inventory loss, says Marybeth Mullaney, an attorney who earlier this week filed an FLSA lawsuit against the restaurant. The total, which typically amounted to $10 to $20 a shift, was proportionally charged to the bartenders based on the number of hours they worked. Triangle's owner didn't return a call seeking comment.

Hyman's also assessed arbitrary fees against servers, according to the lawsuit. Each server was charged $2 per shift for unspecified "breakage."

"A lot of people who worked there probably never broke a plate," says Miller, who's heard of two other restaurants discontinuing the same practice since he filed suit.

Restaurants also have been cited by the Department of Labor for making servers purchase uniforms, the cost of which brought their pay below minimum wage. Tabbuli, for example, required servers to buy $7 aprons. And at The Macintosh, tipped employees were expected to order $125 khaki vests from J. Crew.

"They argued that the vest was street wear," the Department of Labor report says. "We explained this particular item was expensive and the cost prohibitive to minimum-wage exempt employees."

Not every restaurant ignores labor laws. Although it's unknown exactly how many Lowcountry restaurants play by the rules, a two-year Department of Labor investigation of Magnolias that concluded in 2013 didn't find any violations. T.J. Parsell of Hospitality Management Group, which owns Magnolias, Cypress and Blossom, declined to comment.

While worker wage issues in the fast-food sector have lately received the most media attention, Pastor Thomas Dixon of the Carolina Alliance for Fair Employment's Charleston chapter believes chefs who work with guar gum and caviar deserve the same protections as fry cooks.

"When you have rent, gas and children, you should expect a decent day's pay for a decent day's work," he says.

Restaurant labor violations

The following local restaurants were cited for Fair Labor Standards Act violations and assessed back wages over the past decade. Three other restaurants were cited but not assessed. Whether a violation is classified as a single or multiple violation depends on its nature. For instance, if an employer failed to keep accurate payroll records, that's considered one violation. But each worker owed back wages or overtime pay counts as a separate violation. The U.S. Department of Labor does not reveal information about ongoing investigations.

Restaurant

Location

Number of violations

Back wages assessed

Investigation concluded

Al Di La

Charleston

2

$459.48

8/19/2013

Athens Restaurant

Charleston

8

$10,839.32

10/30/2005

Baroni's Pizza

Charleston

8

$5,850.57

2/27/2007

Bighorn's Sports Grill

Charleston

89

$2,152.80

6/4/2012

Boulevard Diner

Mount Pleasant

5

$1,179.85

4/21/2011

Chez Fish

Johns Island

13

$6,603.60

5/12/2005

Cowboy Brazilian Steakhouse

Charleston

3

$2,053.04

4/27/2013

Eli's Table

Charleston

4

$1,033.80

5/29/2013

Fire Street Food

Charleston

2

$98.37

2/17/2013

Gaulart and Maliclet

Charleston

9

$2,656.01

2/3/2013

Graze

Mount Pleasant

8

$7,790.61

11/11/2012

Huddle House

Charleston

3

$11,155.00

10/22/2007

La Hacienda

Goose Creek

10

$54,174.48

5/30/2009

Nathan's Deli

Charleston

2

$1,168.58

12/31/2004

Noisy Oyster

Charleston

11

$4,111.54

9/26/2010

North Towne Grill and Seafood

Charleston

10

$777.26

5/3/2011

O-Ku

Charleston

61

$7,230.42

2/1/2013

Red Pepper

Mount Pleasant

17

$1,422.58

7/6/2008

Rendezvous Sports Bar and Grill

Charleston

23

$3,506.37

5/1/2011

Rio Grande Mexican Restaurant

Mount Pleasant

23

$97,355.96

10/10/2013

Senor Tequila

Charleston

12

$106,103.05

7/19/2010

Snapper Jack's

Folly Beach

14

$3,463.21

4/15/2011

Tabbuli

Charleston

72

$3,289.44

4/30/2013

Tasty Wok

Charleston

6

$4,734.48

3/31/2007

The Blind Tiger

Charleston

2

$2,381.28

9/1/2010

The Macintosh

Charleston

38

$15,198.61

11/9/2012

The Wreckfish

North Charleston

15

$1,019.62

4/30/2013

Toast

Charleston

155

$27,614.84

4/30/2013

West Ashley Crab Shack

Charleston

66

$2,404.38

4/24/2011

Whisk

Charleston

2

$68.42

4/30/2013

Wings ETC

Goose Creek

1

$170.30

3/20/2009

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Enlarge The Macintosh paid more than $15,000 in back wages and made other changes stemming from a 2012 U.S. Department of Labor investigation. The restaurant is one of 34 Charleston-area restaurants cited since 2004 for violating labor laws. Wade Spees/Staff

The Macintosh paid more than $15,000 in back wages and made other changes stemming from a 2012 U.S. Department of Labor investigation. The restaurant is one of 34 Charleston-area restaurants cited since 2004 for violating labor laws.

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